Historic day: The Public Accounts Committee lived up to its name yesterday — and opened its doors to the public. *Photo by Kageaki Smith

Historic day: The Public Accounts Committee lived up to its name yesterday — and opened its doors to the public. *Photo by Kageaki Smith

Tourism officials have defended the decision to renew a multi-million dollar contract with controversial advertising firm GlobalHue without opening the bidding process to rival firms.

Fresh concerns were raised yesterday about the relationship between the Department of Tourism and its ad agency, which had its $14million annual contract renewed in 2009 despite concerns over its performance.

Key tourism officials, including director Billy Griffith, were called before the Government’s Public Accounts Committee in the wake of a damming Auditor General’s report.

The report raised a series of concerns, including the use of media buyer Cornerstone, which charged commissions of up to 181 per cent.

It said there was ‘considerable doubt’ that taxpayers were getting value for money from the contract and concluded that the tourism department had been overbilled to the tune of $1.8million in 2008.

The PAC, chaired by UBP MP Bob Richards, has questioned tourism officials over the Auditor General’s findings on two previous occasions.

But yesterday was the first time the proceedings were held in public, under new ‘open government’ regulations.

Mr. Griffith told the committee he was satisfied that the department had done the right thing in offering GlobalHue a new two-year contract without going out to tender.

He said the quality of their creative work and the results they were showing had over-ridden concerns over the company’s financial controls, which he insisted had been addressed in the new contract.

“The proof of the pudding is how it drives business. The evidence of success is clear when you look at where we stand today. The last 12 months has shown a decisive turnaround.”

Under further questioning he accepted that the statistics did not demonstrate an upturn in tourism fortunes. But he insisted figures for the coming months were looking far more optimistic.

Open tendering

Auditor General Heather Jacobs Matthews, speaking after the hearing, argued that — regardless of the perceived performance of GlobalHue — Government had bypassed its Financial Instructions by not soliciting at least two other bids.

Similarly the Tourism Department did not go through an ‘open tendering’ process when it first recruited GlobalHue — instead putting out an RFP to selected firms.

The Financial Instructions state that any Government contract for goods or services over $5,000 should require at least three quotes. For contracts over $50,000, it’s recommended that open tendering is considered. As it stands this is a guideline but Ms Matthews would like it to become mandatory.

Questions were also raised about why tourism officials had pre-paid for two television adverts during a Howard University basketball game that never aired.

They were also quizzed over the failure to scrutinize the relationship between the ad agency and its sub contractor Cornerstone, which GlobalHue hired to do the bulk of the work.

The Auditor General’s report had highlighted concerns that the company had even attempted to block Tourism staff from ‘doing their job’ complaining to Premier and Tourism Minister Dr. Ewart Brown about micro-management when a senior staff member asked to see copies of invoices from its media vendors.

Glenn Bean, the Director of Tourism and Marketing at the time, subsequently resigned with a $440,000 compensation package, including a confidentiality clause preventing him from speaking to the media.

In a revealing exchange at yesterday’s hearing Jasmine Smith, former acting director of tourism, claimed Mr. Bean’s resignation had nothing to do with his tense relationship with Global Hue.

Scrutiny

The Auditor General Heather Jacob Matthews interjected: “That remark Ms Smith made does not stand up to scrutiny.”

She quoted from a three-page letter GlobalHue sent to Dr. Brown with a litany of complaints about Mr Bean.

The letter questioned his competance and complained he was “making it very difficult for us to do our job”.

It has been argued that Mr Bean was simply doing his job — checking on how GlobalHue was spending public money.

Questioned by the panel, on why they had not picked up on subcontractor Cornerstone’s overspend, Mr. Griffith argued that Tourism was not required to keep checks on GlobalHue’s sub contractors, just GlobalHue.

“I’m not so sure you need to know every sub contractor that is providing services under the contract.”

Ms Matthews said that the sub-contract was so large it was too significant to ignore.

“I’m saying you have the right to ask. We are looking at $33million and Government needs to know what is happening with their money.”

The bulk of the questions yesterday came from Bob Richards and Pat Gordon Pamplin.

Mr. Richards particularly grilled tourism staff on the decision not to ‘shop around’ for a better deal when the contract was renewed in 2009.

 “This was a time of terrible global economic turmoil particularly in the U.S.

“Companies were culling ad contacts because they didn’t have the money. Ad agencies on Wall Street saw their stocks go through the floor.

“This was a time when the Bermuda Government could have done some serious shopping around for ad agencies that would be killing themselves for a Bermuda buck…

“Why was that type of thinking not used instead of going back to your old buddy?”